Numis has picked Dublin for its new EU office to target European clients cut off by Brexit rules after the London-based broker posted record results for the first half of its financial year.
Numis said initial public offering volumes over the six months to the end of March were at their strongest level “for many years”, helping to more than double revenues in its investment banking division to £82m. The company advised on flotations including Moonpig and Auction Technology Group during the period.
Overall revenue rose almost two-thirds to £115.4m, while pre-tax profit increased more than fivefold to £39.3m.
Numis said mergers and acquisitions had also started to recover, driven by domestic and international buyers identifying attractive investment opportunities as the economic impact of the pandemic on the UK market eased. The broker is advising property group St Modwen on a £1.2bn takeover approach from Blackstone announced on Friday morning.
Alex Ham, co-chief executive, said activity for the rest of the year looked strong, with a number of IPOs and deals expected.
Some of these are likely to be European IPOs, despite the fact Numis has been unable to market to EU clients since the UK left the trading bloc.
Numis has relied on so-called reverse solicitation — in effect, requiring EU clients to approach the broker for help — but plans to open a Dublin office next year to ramp up growth across Europe. Brexit had caused a reduction in institutional income from EU-based clients over the six-month period, it said.
“This is a departure for us in expanding beyond the traditional UK market,” said Ross Mitchinson, co-chief executive. “Dublin is a real focus for us to much better attack the European market.”
Mitchinson said EU regulators were being “tough but fair” about requirements on opening the office. “They want to see a well-capitalised business.”
The UK government and regulators have launched a series of consultations and proposals to deregulate and streamline rules to help British financial services groups after losing easy access to EU markets and clients.
But Mitchinson said these had not made much difference so far to Numis, adding that he did not “see the point” of a recent push to reduce the impact of Mifid II rules on research for small companies. “Institutions will not take a different approach,” he said.
Numis will move to a new London office in September, which has been reconfigured with additional “Zoom rooms” to reflect the push for more flexible working in a future split between the office and home.
Ham said he expected Numis staff to aim for two to three days a week in the office, with less need for international travel. But he added that many at Numis would be led by the needs of their clients, rather than any prescriptive working arrangement.
The average market capitalisation of its clients has almost doubled, in part owing to the rebound in the FTSE and a focus on “growth stock” clients such as Asos and Ocado. Numis also stopped working for businesses in the natural resources sector last year — partly owing to environmental, social and governance concerns about mining and oil — but these also tended to be smaller clients.